Pressure Mounts for Resignation at French Bank
Senior politicians here increased calls for the resignation of top executives at Societe Generale, ahead of the board’s regular meeting, scheduled for early Wednesday.
“The pressure is very, very strong,” one of the bank’s directors said. “The politicians want a head to roll.”
The director, who declined to be identified because of the sensitivity of the situation, predicted that the bank’s chairman and chief executive, Daniel Bouton — and possibly one or two other senior managers — would be asked to step down as early as Wednesday. But he and other board members stopped short of saying that Bouton’s departure was a foregone conclusion.
Amid the increasing political pressure on the bank’s management, employee groups revealed that three employees working on Societe Generale’s trading desk had committed suicide in the last three years, at least partly because of stressful working conditions, the groups said.
Fed Is Poised to Deepen Its Rate Cut
Having stunned investors one week ago by unexpectedly slashing short-term interest rates, the Federal Reserve appears poised to announce another rate cut on Wednesday as insurance against a recession.
But policymakers face difficult questions about how deep to cut rates, given that a recession has yet to materialize and that inflation pressures remain a nagging concern in the background.
On Wall Street, where the clamor about a recession remains at a fever pitch, investors are betting heavily that the central bank will lower the overnight federal funds rate by an additional half a percentage point, to 3 percent.
That decrease would come on top of last week’s surprise reduction of three-quarters of a percentage point, and could set the stage for lower interest rates on home equity loans, car loans, and business lending.
But the outcome of the meeting is far from certain. While recent data on the housing market and retail sales have reinforced the impression of a stalling economy, economists were surprised on Tuesday by an unexpectedly strong jump in orders for durable goods in December.
White House Criticizes Envoy Over Iran
White House officials expressed anger on Tuesday about an appearance in which the U.S. ambassador to the United Nations, Zalmay Khalilzad, sat beside the Iranian foreign minister at a panel of the World Economic Forum in Davos, Switzerland, on Saturday.
The United States does not have diplomatic relations with Iran, and the Bush administration has limited its official high-level dealings with Iran to discussions about Iraq, primarily in Baghdad. Administration officials said that Khalilzad’s appearance beside Foreign Minister Manouchehr Mottaki in Davos at a panel on Iranian foreign policy came as a surprise to senior Bush administration officials, who became aware that Khalilzad had appeared with Mottaki only when a video of the discussion appeared on YouTube on Tuesday.
Khalilzad was still in Europe and could not be reached for comment. His spokesman, Richard Grenell, characterized Khalilzad’s appearance beside Mottaki as “just a multilateral conversation with the moderator.”